There a number of qualities that make Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) such a strong contender as a leading ASX dividend share.
For readers that don't know, Soul Pattinson is an investment conglomerate that listed in 1903 and started off as a pharmacy business.
Soul Pattinson recently divested its long-term holding of the pharmacy business Australian Pharmaceutical Industries Ltd (ASX: API).
Here are three qualities that make the Soul Pattinson dividend so good:
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Dividend records and intentions
Soul Pattinson can claim to be the only business in the S&P/ASX 200 Index (ASX: XJO) that has grown its dividend every year since 2000.
That means it is one of the few ASX 200 shares that have grown the dividend through both the GFC and COVID-19.
Some investors may value the income reliability that this ASX dividend share has been able to provide for two decades and counting.
Indeed, Soul Pattinson's leadership has stated their thoughts on the dividend. The Soul Pattinson chair said:
Our goal at WHSP is to pay consistent and growing dividends to shareholders and increase their capital wealth over the long term. These factors together are measured by total shareholder return (TSR).
It has actually paid a dividend every year since it listed in 1903.
Diversified investment income sources
Due to the nature of the Soul Pattinson portfolio, its investment income comes from a variety of industries and sources.
It is not reliant on a specific commodity price or just a mortgage loan book to fund its ongoing dividends.
Some of the larger ASX shares in the portfolio includes TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC) and Pengana Capital Ltd (ASX: PCG).
It also has a number of private investments in areas like agriculture, swimming schools, luxury retirement living and resources.
Dividend is fully funded by annual cashflow
The company gets its investment income from its portfolio of assets.
These businesses and assets pay annual dividends, distributions and interest to the ASX dividend share.
With that cashflow, it can fund its growing dividend to shareholders from the that net cashflow after paying for expenses. In FY21, Soul Pattinson paid 82.3% of its annual cashflow out as a dividend. That means it kept the rest which it can re-invest back into more opportunities for the long-term.
What is the current yield?
Assuming that Soul Pattinson pays an annual dividend of $0.64 per share in FY22, the current grossed-up dividend yield for the next 12 months is 3.1%.
